China’s expanding middle class is driving demand for a wide range of consumer goods and phones are increasingly being used as a means to connect users to a growing number of products and services. Now, Alibaba is among the internet giants seeking to capitalize on potential new users.

 

Alibaba Group Holding Ltd. has announced it has agreed to invest $1.25 billion in Shanghai-based online food delivery service, Ele.me in exchange for a 27.7% stake in the business, becoming its largest shareholder, according to Reuters.

 

Founded in 2009, Ele.me (which loosely translates as “Hungry now?”) has raised approximately $1.09 billion to August 2015, according to Crunchbase, raising $350 million earlier this year from investors including CITIC Private Equity, Dianping, Sequoia Capital, and Alibaba rivals Tencent Holdings and JD.com, according to Reuters.

 

Ele.me offers online food order services throughout 260 cities across China and claims 40 million users and a daily transaction value of $9.25 million, reports Value Walk. More than ninety eight percent of these transactions are generated from mobile devices.

 

If the deal is completed, it will reinforce Alibaba’s standing in the “O2O” space – the online-to-offline or offline-to-online marketplace where businesses draw e-commerce customers to spend money at offline businesses, or brick and mortar customers spend money at online businesses.